For leadership teams facing structural uncertainty, “wait and see” is no longer a strategy. It is surrender. Moreover, reactive instincts to pause hiring, delay expansion, and preserve optionality may only further styme a company’s growth trajectory.
But what if volatility is not a threat to be managed, but an advantage to be claimed? That is the bet bold leaders are making, by treating mergers and acquisitions (M&A) not as a reactive lever, but as a core operating system in uncertain times.
A proprietary analysis of 150 fast-growing mid-market firms in professional services across the U.S., U.K., and Europe reveals a distinct pattern: the winners are not the biggest or fastest. They are the most intentional. In their hands, M&A becomes a discipline, not a gamble; a catalyst for resilience, not just scale.
Volatility Rewards Clarity, Not Hesitation
Global M&A activity has slowed to its lowest level in over a decade. Rising interest rates, geopolitical instability, and jittery markets have prompted many companies to delay or abandon transactions altogether. In early 2025, U.S. deal volume fell 34 percent year-over-year, reaching its lowest quarterly level since 2005.
But history is clear: volatility rewards boldness when it is methodical. During past downturns, companies that pursued acquisitions with strategic clarity and execution rigor frequently outperformed peers in the recovery.
Yet in today’s disrupted market, the M&A playbook itself is evolving. Traditional models such as long cycles, slow diligence, and inorganic synergy bets are giving way to faster timelines, AI-augmented due diligence, real-time integration metrics, and more founder-aligned deal structures.
In this environment, M&A is no longer just a capital allocation lever. It is a dynamic leadership capability that must adapt, orchestrate, and respond in real time. It is a test of whether your business can move faster than the uncertainty surrounding it.
Why the Best M&A Is Born in Downturns Traditional levers like organic expansion, new hiring, and product rollouts are faltering under macroeconomic pressure. As cyclical playbooks break down, the companies that thrive are those that architect growth, rather than wait for it.
High judgment M&A becomes the proving ground for executive teams. When executed with discipline, acquisitions can generate significant competitive advantage. When misaligned, they can amplify strategic risk.
During the 2009 financial crisis, average U.S. deal multiples fell to 6.5 times EV/EBITDA, down from 10.8 times in 2005. By 2019, valuations had rebounded to 11.6 times. One Harvard study found that acquirers who acted during the 2008–2010 downturn achieved 6.4 percent shareholder returns, compared to minus 3.4 percent for those who abstained.
Even in the choppy markets of 2024, large deals over one billion dollars surged 31 percent in Q3 year-over-year, with intra-sector transactions rising from 57 to 75 percent of deal volume.
Making M&A a Strategic Operating System
In an environment where disruption is constant and planning cycles can’t keep pace with reality, M&A must evolve. It can no longer operate as a reactive tool or a string of opportunistic bets. To be effective, it must function as a system—repeatable, disciplined, and grounded in execution rigor.
The most successful acquirers treat M&A much like value investors approach the market: with long-term conviction, a clear thesis, and a focus on fundamentals. They know precisely what they’re looking for and why it matters. This mindset has revealed consistent patterns in Elixirr’s data set—particularly among acquisition targets that outperform over time.
These companies tend to be small, often with fewer than 150 employees. They’re sharply focused, building their value around just two to four tightly interlocking capabilities. And they’re highly efficient, with revenue per head (RPH) above £250,000—sometimes exceeding £350,000 in the best-performing cases.
But these traits reflect more than financial efficiency. They indicate clarity of mission, pricing power, and cultural cohesion. When an organization is small, sharp, and efficient, it’s usually because the leadership team knows exactly what they’re doing—and what they’re not. For acquirers, this profile isn’t just attractive. It’s a signal that integration will be cleaner, synergies more accessible, and long-term value more achievable.
Inside the Winners’ Circle: The Rise of Hidden Champions
Elixirr’s analysis of 150 fast-growing mid-market firms reveals a counterintuitive truth: the most efficient companies aren’t necessarily the biggest. They’re the clearest. The firms with the strongest performance profiles share a common trait—strategic precision. And among them, a standout subset has emerged: what we call hidden champions.
These are businesses that combine compact size, multi-capability focus, and exceptional productivity. They outperform both highly specialized and heavily diversified peers, demonstrating that market-leading economics are not a function of scale alone. In fact, these companies prove that it’s possible to deliver industry-leading value at a modest size—provided the structure is built for it.
Their edge isn’t circumstantial—it’s structural. Lean operating models reduce drag on delivery, allowing resources to move with speed and intent. Strategic clarity creates pricing power, positioning these firms as premium providers in their niche. And deep integration with clients not only improves retention but also drives expansion and renewal.
For M&A teams, this shifts the lens entirely. Rather than chasing size or surface-level growth metrics, the real opportunity lies in identifying firms that punch above their weight—businesses that deliver disproportionate value through tight execution and focused specialization. These companies may command premium multiples, but they offer far greater leverage post-acquisition. In today’s climate, that kind of efficiency isn’t just attractive, it’s essential.
Where Most Don’t Look: Geography as a Signal, Not a Constraint
M&A activity has long clustered around marquee markets like London, New York, and San Francisco—global capitals synonymous with dealmaking and innovation. But Elixirr’s proprietary data reveals a shifting reality. Some of the most efficient, high-performing acquisition targets aren’t in these traditional strongholds. They’re emerging from less obvious places: Copenhagen, Edinburgh, Zurich, and even Los Angeles. These cities consistently outperform their larger peers on a crucial metric—revenue per head. In particular, Denmark and Switzerland stand out for combining strong EBITDA margins with exceptionally lean team structures.
So what’s driving this outperformance? These markets benefit from access to dense, highly skilled talent pools, often cultivated through strong local education systems and industry-specific clusters. At the same time, they offer a level of operational simplicity—lower overhead, fewer distractions, and less market saturation. Perhaps most importantly, many of these firms occupy defensible niches within scalable ecosystems, making them not only efficient but strategically resilient.
For executives in search of acquisition alpha, it may be time to rethink the sourcing playbook. The assumption that value lives only in the usual hotspots is increasingly flawed. In today’s market, secondary cities can deliver better fundamentals, more adaptable business models, and clearer paths to integration—often at a better price.
What Top Firms Reveal About Scale, Talent, and Limits
Elixirr’s data surfaces a critical—and often overlooked—insight for executives navigating both acquisition and integration: in human capital–based businesses, there is a structural ceiling to productivity. While high revenue per head (RPH) is a hallmark of efficient firms, the data shows that only four companies in the entire dataset exceed £350,000 per employee. None cross the £500,000 mark. This suggests that beyond a certain point, productivity gains aren’t simply a function of talent or operational excellence—they demand structural innovation.
That threshold has real implications for dealmakers. Firms approaching or exceeding £350,000 RPH should trigger a closer look. These outliers may indicate something fundamentally different: proprietary intellectual property, tech-enabled delivery models, or non-linear economics that decouple growth from headcount. In short, they may not be traditional services businesses at all.
For acquirers, this insight recalibrates what “top-tier” performance looks like. It establishes new benchmarks for valuation discipline and forces a deeper interrogation of the underlying engine driving results. Are you buying scale—or are you buying something more transformative? Understanding that distinction early can make or break the success of a deal.
Execution Is the Differentiator
It’s a well-known statistic in corporate strategy circles—somewhere between 70 and 75 percent of acquisitions fail to meet expectations. The reasons are familiar: weak strategic alignment, flawed valuation assumptions, and mismanaged integrations.
But in today’s volatile conditions, the cost of getting it wrong has never been higher. What separates successful acquirers from the rest isn’t strategy on paper—it’s execution in practice. Every deal must be anchored in long-term strategic fit, not just opportunism. Valuation discipline is essential; knowing the walk-away price—and having the conviction to walk away—can protect against costly overreach. Diligence must extend beyond the balance sheet, probing leadership, cultural fit, and operational readiness with equal intensity.
Crucially, integration can’t be an afterthought. The “day one” plan needs to be in motion before the ink dries, with a clear operating cadence and value-creation roadmap. And once the deal closes, performance must be tracked relentlessly. Assumptions will shift—what matters is how quickly the team detects and responds.
The most effective acquirers use transactions to reset organizational tempo, accelerate innovation, and embed the capabilities needed to compete in a faster, more fluid environment. Like launching a new product or entering a new market, a successful acquisition demands rigor, speed, and a clear sense of purpose.
Final Word: M&A as a Test of Leadership Agility
With volatility a constant, the best-performing firms are not chasing scale. They are optimizing for fit, focus, and execution. Their edge lies in how clearly they define value and how decisively they move to capture it.
While overall deal activity remains subdued, a new pattern is emerging. Strategic acquirers are already back in motion, using disciplined M&A to reshape capabilities, reallocate capital, and outpace hesitant peers. The early rebound will not be loud. It will be deliberate.
But the deeper shift is this: M&A is no longer just a growth lever. It is a test of enterprise agility. How fast can your team evaluate opportunity? How precisely can you structure, integrate, and deliver value? How confidently can you act when clarity is scarce? In this light, M&A becomes more than a transaction. It becomes a leadership signal, proof of whether your organization can navigate uncertainty or be defined by it.
